NEWS SHOCKS IN OPEN ECONOMIES: EVIDENCE FROM GIANT OIL DISCOVERIES

NEWS SHOCKS IN OPEN ECONOMIES: EVIDENCE FROM GIANT OIL DISCOVERIES

This article explores the effect of news shocks in open economies using worldwide giant oil and gas discoveries as a directly observable measure of news shocks about future output—the delay between a discovery and production is on average four to six years. We first analyze the effects of a discover...

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Veröffentlicht in:The Quarterly journal of economics 2017-02, Vol.132 (1), p.103-155
Hauptverfasser: Arezki, Rabah, Ramey, Valerie A., Sheng, Liugang
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Sprache:eng
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Economic models
Employment
GDP
Gross Domestic Product
Oil exploration
Output
Petroleum production
Studies
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container_title The Quarterly journal of economics
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creator Arezki, Rabah
Ramey, Valerie A.
Sheng, Liugang
description This article explores the effect of news shocks in open economies using worldwide giant oil and gas discoveries as a directly observable measure of news shocks about future output—the delay between a discovery and production is on average four to six years. We first analyze the effects of a discovery in a two-sector small open economy model with a resource sector. We then estimate the effects of giant oil and gas discoveries on a large panel of countries. Our empirical estimates are consistent with the predictions of the model. After an oil or gas discovery, the current account and saving rate decline for the first five years and then rise sharply during the ensuing years. Investment rises robustly soon after the news arrives, whereas GDP does not increase until after five years. Employment rates fall slightly and remain low for a sustained period.
doi_str_mv 10.1093/qje/qjw030
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source EBSCOhost Business Source Complete; JSTOR Archive Collection A-Z Listing; Oxford University Press Journals All Titles (1996-Current)
subjects Economic models
Employment
GDP
Gross Domestic Product
Oil exploration
Output
Petroleum production
Studies
title NEWS SHOCKS IN OPEN ECONOMIES: EVIDENCE FROM GIANT OIL DISCOVERIES
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